Android gets paid regardless for all the data that comes into our phones, ads, commercials, paid apps
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Android is an OS, not a company. Google makes money from advertising so to cut off advertising is cutting off money. Individual app developers make money off ads too. That's why apps like Angry Birds are free. By blocking those ads you are effectively screwing over the developer.
Now with Pandora it's slightly tweaked. Pandora makes money two ways. First way is the paid premium service. Pay to have no ads, basically unlimited skips, and so on. Second way is the ads you see and hear whilst using the free service.
My point should be pretty clear by now. Ads don't cost YOU a penny, but blocking them costs the developer more. Without the developers we would have nothing.
So let's keep the developers happy and paid, and watch a few of their ads once in a while. It's a way of donating to them for their hard work, but it doesn't cost you anything but a few seconds.
Back to Pandora.
By removing a limitation of the free service you essentially give people LESS incentive to pay for the premium service. Which means less money to pay the multiple developers that built the app and service. Remember that Pandora also has to pay licensing fees to the record companies.
Do you see what I'm saying here? The app is free and the basic service is free, so let's help them out a little. Again it costs you naught but a few seconds.
OK rant over.
Edit: After doing a bit of research it appears that the "hacked" copy of Pandora is really a pirated copy of the paid app. This thread will be closed soon, but anyone who posts a direct link to the APK will be reported.